Context: On November 17, 2023, the Unified Patent Court’s (UPC) Hamburg Local Division (LD) threw out a case that consisted only of a claim for patent infringement damages that occurred in Germany, relying on a merits ruling by a German national court (in that case, the Dusseldorf Regional Court) and seeking damages from defendant REEL (corporate website) going back to the year 2016 (PDF (in German)). The plaintiff, a company named Fives (corporate website), appealed.
What’s new: Yesterday, the UPC’s Court of Appeal (CoA) decided that the claim was admissible, and also held that the UPC had jurisdiction over damages occurred in whole or in part prior to its start date (June 1, 2023), provided that the patent was still in force at that date (PDF).
Direct impact: The CoA remanded the case to the Hamburg LD for further proceedings. Presiding Judge Sabine Klepsch will not be upset that she was overruled, but German judges generally show little enthusiasm for damages determinations.
Wider ramifications: This is one of the most impactful rulings by the UPC’s CoA to date and could lead to the filings of various other claims (by different parties) with the UPC that would otherwise have been brought in national court:
- There may be other situations in which patentees have obtained a favorable and final merits decision in national court, but for whatever reason believe the UPC is a more attractive damages jurisdictions.
- Regardless of whether the decision on the merits is made by the UPC or not, the decision provides clarification that damages may predate the start date of the UPC (June 1, 2023), provided that the patent had not expired before that date.
The patent-in-suit, EP1740740 (“Compact service module which is intended for electrolytic aluminium production plants”), has a 2005 priority date and will expire in a little over two months. The German infringement litigation on the merits resulted in a final entry of liability in 2022. The nullity action in Germany’s Bundespatentgericht (Federal Patent Court) took a little longer. In any event, the infringement lawsuit not only started but even ended before there would have been the option of filing a UPC action.
To understand the CoA’s decision, one has to properly separate the case-specific circumstances from what could happen further down the road:
- It is obviously opportunistic behavior to file a damages claim with the UPC instead of doing the most obvious and logical thing, which would have been to seek damages in German national court. REEL rightly complained that this boiled down to “jurisdiction-shopping.” Whether it will pay off will never be known as there will not be a damages award in German national court in an alternative universe. Generally, German judges prefer to make merits determinations and grant injunctions over hearing damages experts.
- Let’s fast forward to June 1, 2030 and assume that the UPC’s transitional period is not extended. In that case, the UPC will have exclusive jurisdiction over EPO-granted patents (EPs). A damages claim could, however, relate — in whole or in part — to a period before that date. Neither would it be acceptable that damages would cease to be available for part or all of that period nor would it serve the interests of judicial economy and consistent judgments if someone might have to bring damages claims in different courts with respect to different periods.
The CoA’s second panel has previously stressed that the UPC Agreement (UPCA) is the governing statute and the Rules of Procedure (RoP) matter only if there is no conflict between them and the UPCA (November 13, 2024 ip fray article). Here, the second panel even recognized that the way the UPCA is worded can be understood, at first sight, to rule out damages claims without a prior merits decision by the very UPC: the UPCA basically says that you can bring an application for damages, but not an original claim. But in the end, the CoA felt that the UPCA may have been drafted with only the Unitary Patent in mind. That is doubtful as the drafters always knew that the UPCA would also apply to EPs. Still, there are reasons for which one can come down on the same side as the CoA’s second panel. For instance, the infringer may even stipulate to an entry of liability.
The appellate decision holds that a national court decision by a contracting state of the UPC must be recognized. Article 45 of EU Regulation 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (referred to in the CoA decision as the “Brussels Ia Regulation”) provides for some exceptions, but REEL did not invoke any of them in the case at hand.
The bottom line is that the case goes back to the Hamburg LD, well over a year after its original dismissal, for further proceedings, and Fives will be able to seek damages going back a long time, for the most predating the start date of the UPC.
The CoA takes an expansive view on the UPC’s jurisdiction compared to what the Hamburg LD had decided, including that it suggests patentees deprive themselves of jurisdictional choice only in connection with opt-outs, but only because it is expansive does does not mean that it is wrong. In the end the UPC itself has to resolve questions that result from oversights or omissions in the language of the UPCA.
In this case, the merits ruling by a German court is geographically coextensive with the damages claim pursued, at this point, in the UPC: it’s all about Germany. Sooner or later, and probably sooner rather than later, someone may take a national merits ruling and then seek multi-country damages in the UPC. In fact, depending on the situation between Fives and REEL, it could even happen here, in the form of an additional filing.
Panel: Presiding Judge Rian Kalden, Judge-rapporteur Ingeborg Simonsson and Judge Patricia Rombach.
Counsel for Fives: Bonabry’s (previously Preu Bohlig’s) Konstantin Schallmoser.
Counsel for REEL: Hogan Lovells’s Dr. Benjamin Schroeer (“Schröer” in German).